The Rise of ESG: Environmental, Social, and Governance Principles for EHS Managers

April 6th, 2021 by Dakota Software Staff

Adaptation is the name of the game in business and industry—those that fail to evolve fail to thrive. One trend on the rise is environmental, social, and governance (ESG) reporting, and it is increasingly a business requirement. Your environment, health, and safety (EHS) teams are in the perfect position to support organizational ESG efforts.

EHS professionals have long been aware of the environmental and safety compliance obligations facing their companies, and they routinely set their sights beyond compliance, looking to create robust safety cultures and programs that focus on total worker health. Now, multiple internal and external stakeholders are interested in greater corporate transparency when it comes to environmental, social, and governance issues. ESG is the centerpiece of organizations rising to meet these demands.

With Earth Day right around the corner, let’s take a look at this evolving aspect of the EHS function and why it is essential for your business.

What Is ESG?

Stakeholders, whether they be employees, investors, customers, the general public, or even regulators, no longer estimate a company’s success solely by its financial performance. As increased awareness of environmental issues take center stage, ESG is now a prominent non-monetary yardstick by which an organization’s impact is measured.

ESG sometimes may be thought of as interchangeable with concepts such as corporate social responsibility (CSR) or sustainability, but there is a key difference. While “sustainability” as a term may refer to a variety of different factors and social responsibility can be assessed on the basis of many subjective judgments, ESG refers to precise measurements and hard data that can be tied to environmental performance, compliance with applicable regulations, and conformance to socially-oriented corporate policies.

Considerations related to ESG that may fall under the purview of EHS include:

• Water and energy efficiency, usage, and/or waste

• Air emissions data and reporting

• Overall carbon footprint of the organization

• Waste management programs, including recycling, wastewater treatment, and proper hazardous waste disposal

• Visibility into the related performance data of other organizations within a parent organization’s supply chain

While ESG does remain a somewhat nebulous concept, it is becoming the common parlance for a certain type of performance that the public (as well as employees and/or prospective hires) expect of organizations. It also may become far less abstract—and far more required—in the very near future.

Why Is ESG Essential for Modern Business?

The fact is that ESG is a requirement for modern business—perhaps not strictly a legal compliance obligation (yet), but it is an absolute necessity for businesses that wish to adapt and thrive amidst the ever-changing industry landscape. And, with ESG disclosures potentially becoming mandated by the Securities and Exchange Commission (SEC), forward-thinking organizations must take action now.

This challenge is not necessarily a new one, however, at least not as far as EHS professionals are concerned. Compliance is the bedrock of social responsibility and companies must therefore consider both when creating initiatives and reporting systems that will achieve their ESG goals. To cite just a few examples, many large companies must already report to various regulatory bodies or adhere to voluntary management standards, including:

• Emissions reporting to the U.S. Environmental Protection Agency’s (EPA) Greenhouse Gas Reporting Program (GHGRP).

• Those organizations that utilize the International Organization for Standardization (ISO) 14001 environmental management framework already have a head start on collecting and leveraging data that are of critical importance to ESG.

• Hazardous waste treatment, storage, and disposal facilities (TSDFs) already track their waste management data under the e-Manifest Program.

Organizational EHS teams enjoy the benefit of already having a great deal of data at their fingertips, and they must be ready to take the lead to help their businesses adjust and adapt to the demands posed by the requirements of ESG. In far too many EHS programs, however, data remains either inconveniently siloed or obfuscated by outdated spreadsheet-centered management systems.

That’s where technology can step in to help.

Simplify ESG Efforts with Technology

The rise of ESG should be viewed by industry as a positive development, not a troublesome burden. With that said, for some organizations it can be a complex endeavor to gather and analyze the data necessary to achieve corporate ESG transparency. These processes can be streamlined and optimized with the use of technology solutions.

Dakota Software’s ProActivity Suite makes it easier for companies to achieve and maintain ESG reporting excellence. Supported by a comprehensive library of environment, health, and safety regulations, the Suite is rooted in the plan-do-act-check (PDCA) approach, with the addition of an important fifth consideration:

• Plan: The ProActivity Suite Profiler provides a clear and concise compliance framework that enables EHS professionals to plan while keeping their EHS compliance programs current.

• Execute: The Suite’s Tracer gives EHS professionals the ability to execute their compliance programs and provides a real-time, enterprise-wide view of their company’s EHS compliance status.

• Verify: The Auditor tool helps EHS managers verify ongoing compliance status by capturing audit data and identifying gaps.

• Improve: The Suite’s Scout feature enables EHS professionals to proactively uncover issues by capturing and analyzing event data related to incidents and accidents, thereby improving safety and regulatory compliance.

• Sustain: Here is the important final addition to the PDCA framework, and a critical factor in ESG success. Dakota Metrics removes the complexity of tracking and reporting on your environmental performance, ESG, and CSR initiatives, helping EHS managers maintain sight of corporate sustainability goals and rise to the challenge of meeting them.

Metrics are crucial to sustainability—and it’s time to begin moving away from spreadsheets. A comprehensive metrics system allows EHS teams to more quickly and efficiently normalize, aggregate, and report on ESG data, revealing potentially wasteful organizational processes and pointing the way toward improved methods.

As social responsibility and proactive environmental stewardship increase in importance for businesses worldwide, EHS is in a prime position to drive the trend and play a large role in the future of ESG within their organizations. EHS managers, supported by technology, should take every advantage of this opportunity.